Investing in consumer loans can be a unique investment strategy that can deliver increased security for investors that may not be interested in investing in commodities, stocks or assets. Investing in US consumer loans can also add a well-rounded support unit for your portfolio.
US consumer loans are available to take on as an asset and they’re accessible to any type of investor regardless of the amount of money that you should put into investments.
Consumer loans are assets that are created out of consumer credit debt. The truth is that many consumers do carry some type of debt and continue to pay interest on their credit cards. It’s estimated that the credit industry in the United States accounts for $880 billion in revolving credit. The interest rate on most of this debt sits at above 15%. In most cases with this credit back if a bank is charging around 18% interest they’re going to be losing out of credit card business at around 2.5%. Taking this at a loss still ensures that there is a very lucrative business available for credit companies.
Rather than borrowers having to pay such extensive interest rates there are a number of investors that are now coming forward with their money on platforms like Prosper, Lending Club and Upgrade. This is where you can put your money to work by offering people credit or loans the same way that a bank does but with a much lower cost. While there is risk, online marketplace lending does come with its fair share of rewards, top contributor companies today have distributed more than $5 billion worth of loans and most investors estimate their return on invested capital at an average of 6%. This is a fairly modest and reasonable expectation that could be an excellent addition to your portfolio.
by Scott Jeffrey